Japanese investors sell overseas assets for third week in a row

(Reuters) – Japanese investors sold overseas assets for a third straight week through Oct. 26, cashing in on the yen’s sharp decline amid U.S. election uncertainties and reduced expectations of big Federal Reserve rate cuts.

According to the Ministry of Finance data, Japanese investors sold foreign stocks and long-term bonds worth a net 397.6 billion yen and 889.6 billion yen ($5.81 billion), respectively, posting their third straight weekly net sales in both segments. They, however, added a net 116.5 billion yen worth of short-term bills.

While the yen rallied in the September quarter, prompting Japanese investors to acquire foreign assets, it has lost about 6.4% against the dollar this month, creating profit-taking opportunities for Japanese market participants.

The yen reached a three-month low this week after the ruling coalition lost its parliamentary majority, and is on track for its seventh sharpest monthly decline ever and the largest since November 2016.

Last quarter, Japanese investors bought approximately 2.02 trillion yen in stocks and 5.11 trillion yen in long-term bonds. However, they have sold around 667 billion yen in equities and 1.19 trillion yen in long-term debt securities so far this month.

In parallel, foreign net purchases of Japanese stocks fell to a five-week low of 8 billion yen last week, as investors exercised caution due to the election in Japan.

Foreigners, meanwhile, snapped up a net 277.9 billion yen worth of long-term Japanese bonds, registering their fourth weekly net purchase in five. They, however, sold 682.6 billion yen worth of short-term instruments.

($1 = 153.0900 yen)